As I noted earlier this week, the Constitutional obstacles to the AIG bonus tax making it’s way through Congress don’t seem to amount to very much:
March 20 (Bloomberg) — Courts probably will uphold Congress’s effort to tax employee bonuses at American International Group Inc. and other companies receiving federal bailout funds, several legal experts said.
(…)
“Given the state of the law, it will be unlikely that the Supreme Court will strike down this legislation,” said Edward McCaffery, a University of Southern California tax-law professor who says he questions the wisdom of the proposal.
Most significantly, as Harvard Law Professor Lawrence Tribe notes, the legislation does not seem to be vulnerable to a Bill of Attainder objection, which is likely the strongest argument against it:
The measure doesn’t single out employees at AIG and instead uses general language affecting all companies receiving more than $5 billion in federal bailout money. Bonuses for employees at Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley would be affected.
Tribe also pointed to a provision in the measure exempting executives at companies that repay enough bailout funds to reduce the government’s investment below $5 billion.
That provision “makes it clear that the goal is not to punish corporate executives generally, but is simply to ensure the appropriate use of government funds,” Tribe said in an e- mail.
And this would be made even more clear if the final bill that comes out of Congress ends up bearing more resemblance to the Senate bill I talked about earlier today than the House bill passed earlier this week.
As despicable as it is to see these the way that Congressmen and Senators behaving over this issue, the truth of the matter is that they are within their Constitutional authority in doing so.
